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Third-party funding in spotlight as firm beats negligence rap


By Jonathan Ames

08 January 2013 at 11:53 BST


Two law firms have dodged negligence bullets in recent days, with one case highlighting growing concerns over potential pitfalls in third-party litigation funding.

Personal injury case triggers third-party funding row

Personal injury case triggers third-party funding row

A New York judge dismissed a Brooklyn man’s claim that his law firm should be held liable when he received a negligible fraction of a personal injury claim, with nearly all the settlement going to litigation funders.
The court found that Elwyn Francis had agreed each level of third-party funding of ‘his own free will and accord’ and that law firm Mirman Markovits & Landau could not be held responsible for failing to negotiate better terms. According to a report in the New York Journal newspaper, Mr Francis received only $111 from a $150,000 settlement, with the funders bagging most of the cash.

Confined

According to the report, the judge found that the retainer agreement between the client and the law firm showed ‘that, although it fails to address loans from third parties, it is clearly confined to representation of the plaintiff for injuries sustained as a result of an accident’.
The Journal goes on to quote the lawyer acting for the law firm, Mark Anesh, a partner at national law firm Lewis Brisbois Bisgaard & Smith. He maintained the ruling means lawyers do not assume a duty to advise or consult with clients regarding third-party funding before the deals are signed. ‘You can't be held liable for something you don't do,’ Mr Anesh told the newspaper.

Settlement terms

However, Mr Francis’ lawyer, Adam White of New York firm Vaccaro & White, responded by saying the judge misunderstood the core of the claim. He told the Journal that the ruling failed to address the crux of the issue – whether lawyers have a duty to determine a client’s liability to a third-party funder before recommending settlement terms.
Third-party litigation funding is highly controversial in the US, with many leading in-house lawyers at major corporations maintaining that the schemes exacerbate the country’s already rampant compensation culture.

Property deal

Meanwhile, a Philadelphia judge has summarily dismissed a negligence claim against one of the city’s oldest law firms over a multi-million dollar property deal.
Partners at global law firm Morgan Lewis & Bockius persuaded Judge Albert Snite to throw out a claim from property leasing company TCA Girard in relation to an area of land in the centre of Philadelphia. However, the judge also dismissed the law firm’s counterclaims for $378,000 of unpaid fees – although he agreed the partners could refile a claim in the future.

 
   
 
 
 

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